Analyst Tear-Down Cites PS3 as 'Engineering Masterpiece'

November 22, 2006

Sony may have gotten more than its share of bad news this year in the form of production delays, marketing missteps, stiffer competition than expected, and a record recall of its laptop batteries, but it's getting rave reviews from some game console techies for the technical prowess of its already popular PlayStation 3, released last weekend in North America and earlier in parts of Asia.

While problems mass-producing the internal Blu-ray Disc drive components resulted in some delays and, thus, severe supply shortages, for the quickly sold-out PS3, analysts at iSuppli have performed a tear-down of the unit to check out all its internal workings to try to determine its real net worth of all its bits and pieces compared to actual retail prices.

The dissection, according to iSuppli, reveals "an engineering masterpiece that sets a new high mark for computing price/performance--even when considering it is more expensive than its nearest rival, the Xbox 360..." The firm concludes that with the PS3, consumers are "getting the performance of a supercomputer at the price of an entry-level PC."

Combined PS3 materials and manufacturing costs come to about $806 for the 20 GB model, and $840 for the 60 GB version, according to iSuppli's Teardown Analysis (not including the controller, cables and packaging). At these estimates, Sony would be taking a noticeable loss on each unit sold, using typical retail price points of $500 and $600, respectively.

In contrast, according to iSuppli, Microsoft's Xbox 360 has an estimated manufacturing-and-materials total of more under $324, which is about $76 less than its $400 suggested retail price.

Analyst iSuppli said while it is common for game console makers to lose money on hardware and make up the loss selling game titles, the estimated size of Sony's per-unit loss seems "remarkable" to the analyst.